Esports Hyper-Growth Pt II: Players
This is a 4 part series:
Part I: Contenders vs Pretenders
Part II: Players
Part III: Staff
Part IV: Investors
In my last article Esports Hyper-Growth: Contenders vs Pretenders, I talked about how esports is experiencing hyper-growth and the difference between contenders and pretenders among orgs. This is a follow up article with specific advice for players — especially those signing with T2-T3 orgs or are new to esports.
In general, T1 esports leagues and T1 orgs are good when it comes to contract terms.
Players
Fans make the game special, but players help make the game reach new heights of inspiration.
Esports would not exist without you, so before you sign a contract don’t be afraid and confident to negotiate what you believe you are worth. So before joining an org there are a few things you should do such as exploring available options and consulting with those close to you or more knowledgeable than you.
If the offer doesn’t feel good and you aren’t happy with it and you do not negotiate then you are simply not respecting yourself or — like the majority of young players— you might just be really nice and/or naive.
What’s most important is that players feel they got what they believe they deserve — when players don’t or orgs seriously undercut players due to having more knowledge that’s a bad start to a player-org relationship.
Keep in mind that since orgs are a business, they will look out for their business interests first and foremost unless you tell them otherwise to consider your personal interests.
In general, orgs have the advantage over players in negotiations because of asymmetric information — players just don’t have enough knowledge and most players have signed 0 or a few contracts while orgs, they signed with plenty of players and seen most of it from top to bottom, T1 to T3 esports, have legal counsel, etc.
How do you even it? Gain knowledge to better understand your esports game market and your relative value — without a basic understanding of the market, game, and what you offer you might negotiate too low. Ask yourself simple questions: Who brings more to the table in this relationship, the org or you/your team? What if you are an up and coming player? Where do you start?
Monthly Prize Pool
A good starting point is breaking down the prize pools. Let’s take a look at the table below assuming the standard 80% of the prize pool goes to the player and 20% to the org:
This is a good baseline to go off of if your team is the best team and tend to place 1st-2nd. Why is this calculation a good starting point for negotiations? If the org contracts players too low and the org turns a profit from the 20% of prize pool earnings, then that means the value equation is unbalanced and overly benefiting the org. And orgs shouldn’t take anything more than 20% unless they are paying very high salaries to compensate for the prize pool take rate. If an org wants 40% or higher and your team places top 1–3 often, then you’ll be paying the org from your team’s prize pool cut that’s is paid to the org, so always negotiate the best for your team.
Why? Because properly run orgs will also extract additional value on top of the prize pools (i.e. sponsorships such as Twitch, where Twitch pays an org thousands per month or more for that org’s competitive players to stream exclusively on Twitch — that’s ONE sponsor). Or they are part of a franchise program that pays the org tens to hundreds of thousands annually to participate in a game.
If an org tells you they have to contract you at a lower price so they can break even or make money off the prize pools, don’t contract with them, they have a failing business model and will be insolvent or worst, mess around with your contracts to avoid paying you — like charging you unreasonable contract fees.
In addition, great players/teams helps the org grow fans on social media, which orgs use to pitch to secure additional revenue streams (such as sponsors or content deals, social media promotions, etc.). Or orgs are contracted tens to hundreds of thousands by the publisher to do content or project work. The players play a central role this value creation — of course a majority of the credit goes to organizations for their business savvy to pitch, create, and close such revenue deals, where rightfully a majority of the revenue should go to the org but part of such revenue streams should go to the players who are part of making it happen.
Social media example — Instagram: did you know Instagram influencers (if they hustle and work hard) can make ~$100 for every 10,000 followers per sponsored post? Gaming instagram influencers might be lower because gaming and the economics of the industry is not as mainstream and popular as fitness to fashion and the economics to market maturity are different. So instagram fitness, models to fashion influencers will command better rates than gamers — so don’t get too carried away here. However, your social media footprint is valuable to yourself and an esports org because they use it to pitch to sponsors.
Exposure
Player and Game exposure is also the value that great orgs are able to capture and leverage. If the game is a AAA title and has great exposure like League of Legends (157+ million monthly average unique viewers for example), such exposure combined with a popular top player especially when they win, gives exponential value to the org — they’ll secure tons of lucrative sponsorships and revenue deals easy. However, this value is hard to quantify and more determined by market forces more than anything which leads to the next topic.
Explore Offers
What is the market (the competition) offering? Find out, just like a car, you don’t want to only go to 1 autoshop to get your car fixed, you want to visit at least 2+ autoshops and get quotes from them. You need to do the same with orgs. Competition for you is good, that means you are in demand — and more importantly gives you an idea of what you are worth. This is simple economics, and when orgs compete with one another over you, you win. You also get to see where orgs are either lowballing you or overly paying (if it’s one or the other, question it).
For non-T1 orgs and overpaying with huge contracts — caution:
Over paying sounds great so question it if it seems too good to be true because I’ve seen too many players lured in by very high thousand dollar salaries relative to normal market salary ranges only to not get paid those salaries in a timely manner or not get paid at all due to insufficient funds or contract penalty ploys. I know this has happened to players where they are owed thousands for months to even over 1 year past due. Similar excuses are given in situations like this, “we didn’t receive the prize pool yet (usually not true) to we have to figure out taxes (again, a confusion/stall ploy), to we are waiting on more funding to come in (probably meaning we spent your hard earned prize money or salary and literally don’t have money to pay you out right now), to someone else owes you this money, once they pay us, we’ll pay you (seriously?)”.
Fortunately, I helped a lot of these players from NA to EU get back what they are owed because these bullies take advantage of uninformed kids.
Here’s an example story: a well known player took down his twitter (less than 2 weeks before his contract ended) and instead of talking to the player sensibly and informing him he will be subject to a contract fee punishment in the thousands (as in he’s not getting his entire month’s salary) and giving the player the time to resolve it (like putting back up his twitter banner which the player offered to), the petty leader of this org used this event as an opportunity to initiate punishment onto the player via the contract and not pay him his thousands in salary. The player even apologized when it was addressed to him. The player’s contract was used against him to save the org the cost of paying thousands out.
Such shady tactics, have long-term reputation consequences and reveals their character. Contracts are used to punish bad actors who do really bad or illegal things, it should not be used to unreasonably punish an overall good person, especially a minor, over petty things.
When you encounter people like this, you make sure to never work with them again and spread the word to other players and orgs.
This is how an org’s reputation can be completely diminished, and in this case, the org now has to overpay to secure talent and even when they overpay, players don’t join. In addition, the player was a minor and his parents were not consulted and looped into such unreasonably severe contract punishment fees. The ugliest part and sure sign of a T3 shady org? They tell the minor to get a lawyer and take them to court if the minor wants his salary paid— of course a minor or his parents will not spend thousands on a lawyer to get back thousands (it might actually put them in the negative if the reward amount isn’t in the tens of thousands and imagine the emotional stress, effort, and time to go through all this).
Unfortunately, the kids and their parents usually don’t have the recourse to do much in situations like these— the bully gets away with it.
It’s really sad and I see this happening a few times because such bad actors know kids and their parents won’t take the time, effort, and money to hire a lawyer and fight back by suing.
Timing
Avoid orgs that force an artificial time deadline on you, saying “you need to sign ‘right now’ or ‘in 24 hours’ or this offer is gone”. It’s a common ploy, because they know when they rush you, your decision quality dramatically decreases. T3 orgs tend to do this, what I recommend is you probe why there is such a short deadline in the 1st place. Evaluate the reasons given because valid reasons are roster/trade deadlines, league schedule, etc. If they don’t give a valid reason why the offer expires so early, then raise your eyebrows and don’t fall into the artificial pressure they are creating on you to sign early.
On the other hand, orgs won’t extend offers indefinitely and you need to respect the offer they gave you, so 7–14 days is the longest you should take to get back to them. If you love the org and want to join, then get back to them sooner (after you evaluate your options) because some top tier orgs negotiate with multiple players (especially when entering a game) and if they find a better team or a player becomes a free agent who is just as good or better, then your window of opportunity may have just closed because you dragged on your decision when you didn’t need to.
Check References
Esports is a small community and you will learn a lot about an unknown or T3 org by talking to former staff, players, and leaders. Don’t depend on just 1 reference, always talk to at least 2–3. Players will be the best reference point, because they will share 1st hand experiences in private with you and be more honest.
I have had many players check references not only with me but former players due to the negative stigma about specific orgs and it is usually confirmed once they begin talking to leadership of that org or when they review their contracts.
The difference between a pretender and a contender is talking and doing, pretenders like to talk but contenders don’t need to talk about it, they walk it and live it. The talk and walk can all be verified by reference checking — when a majority of the former players and former staff you talk to say similar things, that sheds some insights.
“You are what you do, not what you say you’ll do” — Carl Jung
Contract Length
Team owners/managers will tell you the standard contract length is 1 year and they will want you to sign at least for a year. For T1 orgs like Team Liquid to C9, etc. some of their contracts span 3 years and are very lucrative — that makes sense because they are a huge brand offering huge salary/benefits. If you do not know the org’s reputation or are unsure, do not sign for a year, instead ask for 6 months or less. You want to feel out the org and make sure you a joining a place you will be happy at for those 6 months to a year (remember that your happiness directly impacts your performance).
If there is a known negative stigma around the org from many former players and staff, then negotiate into your contract a 60-90 days evaluation period, where if either party is not happy they are free to unilaterally void the contract and part ways.
Contract Terms
Remember, you can negotiate ANYTHING on the contract, don’t be afraid to ask if certain things be crossed out and removed. Here are some contract terms to avoid — if you see these you should probably run away.
- Taking a cut or % of your streaming, Instagram, or YT content (anything you do for yourself without any connection to or benefit from your org belongs 100% to you and no org should be trying to get a cut of it).
- “Trial Contracts” that are one-sided where the org can unilaterally cancel the contract but YOU CANNOT. That is a huge NO-NO, in addition the “trial contract” pays you $0. Why sign? You should never sign for nothing and do not sign if the contract does not benefit you in anyway and it’s overly benefits the org. Some T3 orgs try to sign as many top players as they can in a growing esports scene, sometimes outright cheap hundred dollar contracts to “trial contracts” so when the esports scene explodes, they use such cheap contracts to demand thousands of dollars buyouts (30–100 times the monthly amount that they signed you for netting a huge profit to the org and nothing to you, you just gave away your signature) from orgs that want to sign such talented players. This really hurts your chances of being signed when they demand buyouts and you can lose an opportunity of a lifetime to sign with say a TSM when they enter and a formal league structure is announced. Ask yourself, is a couple hundred bucks over ONE year WORTH your signature? Talk to other players who have been in the orgs that are trying to sign you to such contracts, DO YOUR HOMEWORK, check references before you sign otherwise you might be getting yourself into a situation you are totally going to regret signing over a few hundred dollars or worst $0 trial contract when the esports scene was so new. It is better to wait it out, reach out to players who have been in similar situations, reach out to people like me who care about player fairness and treatment, etc. to help you navigate and avoid snake orgs.
- Any term that states that the org can arrange for a sponsor to sign a separate contract with player to cover some or all of the org’s salary responsibilities to the player — it is such an anti-player term that cheats players out of the additional value they could be earning. This is a huge no-no, if the org helps get a sponsorship for the player, what is reasonable and what most orgs do is take a 20% or so cut of the deal for helping to get it. In a situation like this, the player should have been paid $3,000 (org salary) + $2,400 (80% of sponsor deal)= $5,400 monthly instead of only $3,000/monthly. Think about it. The sponsor wants to contract the player directly not the org, so think twice when you see a greedy term like this.
Note: Esports lawyers have approved a term like the one above for a T3 org that ultimately worked against the players who signed such a contract. The lawyer was hired by the org and his/her job is to help the org, not the player. So if an org says I had so and so reputable esports lawyer review this contract and he/she said it is good, doesn’t mean it’s good for YOU. So this is why you need to have your own lawyer or someone with experience with contracts to help you.
- Prize pools % where the org takes well over 50% from the players/staff. Some orgs take 80%+ of a player’s winnings. Really really negotiate hard here — 20% to org, 80% to player is usually the standard.
- Prohibitively high buyout fees for your contract. Buyout should be around 3x-5x the monthly salary — it may be higher so make sure it is reasonable. Remember, the higher the buyout fee the more unattractive you become to other orgs while you are contracted. Negotiate it to a number that’s down to earth that you are comfortable with.
- Terms that state if another org wants to sign you then 90-days post-contract you are not allowed to join another org or has some weird fee clause. For example, in order for the new org to sign you they need to pay your old org 3x the total contract salary of your old paid you. It is like org A paid Lebron James $10 million for the past year contract and it’s been under 90 days since Lebron James’ contract expired. Org B, if they want to sign Lebron, would have to pay Org A $30 million ($10 million x 3) just to sign him (this is a weird and red flag term)…then org B has to pay Lebron James’ his new contract salary on top of that. Terms like this, you need to delete it from your contract.
- High or unreasonable player “punishment fees” like $100–1000+ for forgetting to put on your team jersey during streaming, etc. avoid like the plague. Of course, players should be punished if they don’t represent the org and brand properly and are bad actors. The key is to read into the terms of the penalty fees, it should be reasonable where you have time/warning to correct it vs it can be discriminately levied against you because you didn’t have your jersey on for 5 min of the stream for example. And this has happened if you read the story I shared earlier of the player and him taking down his Twitter banner.
- There are A LOT more weird terms out there — question everything in the contract if it just doesn’t seem fair.
Conclusion
Thank you for taking the time to read this article, please reach out to me if you have any questions — especially if you are a player and need help or advice. Part III will be all about staff in esports and it’s also a topic very near and dear to me which I will publish shortly. My goal is to help continue elevating mobile esports and contribute in small ways towards helping esports become more professionalized.
